5. Getting Your House in Order – Financials, Records & Systems
A story about facing the facts, tightening the bolts, and preparing for new eyes on old routines.
James stood in front of the filing cabinet in the back office, one he hadn’t opened in at least six months.
He reached in and pulled out a folder labelled “Lease – 2019,” only to find old coffee-stained documents and a handwritten note from the previous landlord that read more like a chat than a contract. Nearby was a thick envelope marked “Staff Contracts – Update ASAP.” He winced.
In the early years, it hadn’t mattered. Things got done. Deals were sealed with handshakes. The team was tight. The books were fine… enough.
But now, as the reality of going to market came into view, James realised the business didn’t just need to look profitable, it needed to be legible.
“Buyers don’t buy chaos,” Sarah had said on their last call. “Even if the chaos is profitable.”
He laughed at the time. Now it wasn’t funny.
It was time to get his house in order.
The Psychological Perspective
For many owners, cleaning up business records is an act of exposure. You’re letting someone else, often a stranger, see the mechanics of how you’ve operated, possibly for decades.
That vulnerability can stir up shame, resistance, or even panic. Especially when you realise how much of your business runs on gut feel, quick fixes, or undocumented decisions.
But here’s the reframe - this isn’t about perfection. It’s about clarity. Tidying your records isn’t an admission of failure. It’s a statement of readiness.
Facing the mess is an act of courage. It’s also the start of your legacy being handed on clean.
HR Best Practice
People systems matter just as much as profit and loss statements.
From an HR perspective, a well-prepared business includes -
Up-to-date employment agreements
Defined roles and responsibilities
Documented policies (e.g. leave, health and safety, performance)
Clear reporting lines and succession mapping
Staff entitlements accurately tracked and accounted for
Buyers want to know your people are secure, compliant and contractually sound. If the HR cupboard is messy, they assume other things might be too.
Sarah suggested James get his HR adviser to do a basic audit. “Think of it as spring cleaning,” she’d said. “Not judgment.”
Red Flags To Be Mitigated Against
Inconsistent or unclear documentation is a major deal-killer. Common red flags include -
Missing or informal financials (especially for cash-heavy businesses)
Personal expenses tangled in business accounts
Lease or supplier agreements that are outdated or unwritten
Payroll records that don’t match what’s in the books
Critical knowledge or processes held only in the owner’s head
These aren’t just paperwork issues. They raise buyer concerns around risk, liability and credibility. They can delay or derail due diligence, or worse, lower offers significantly.
James didn’t need to clean up everything overnight. But he did need a plan and support.
Ideal Owner Mindset
The mindset here is pragmatic and proactive.
A well-prepared owner -
Accepts that transparency builds trust
Leans on their accountant, lawyer, and HR team early
Sees documentation not as admin, but as value
Understands that clean records equal negotiating power
James didn’t have to become an expert in compliance. He just had to take ownership and let the experts help.
Key Takeaway - What buyers can’t see, they won’t trust. Cleaning up your records isn't bureaucracy. It's building the bridge to a confident, credible sale.